Airlines set for low cost Atol compliance

Airlines will face lower costs to comply with Flight-Plus Atol regulations than travel agents and tour operators, the Department for Transport has revealed.

The DfT acknowledged carriers will pay less to provide financial protection for consumers in an official assessment of the impact of bringing airline sales of holidays into the Atol scheme, published this month.

The department notes carriers have told it that “requiring airlines to be Atol holders would be disproportionate and unnecessarily costly”.

However, it says airlines that would need an Atol would not require bonding in the way tour operators and agents do because “EU airline operating licences include financial requirements and monitoring arrangements”.

The DfT also points out carriers selling their own flights as part of Flight-Plus holidays would not be expected to pay for airline failure insurance.

So while the DfT estimates the cost of supplier failure cover on Flight-Plus sales by tour operators and agents to be £3 per booking, it calculates the cost for carriers at 50p.

The total additional costs per holiday sold by airlines – of the Atol-protection charge, supplier failure insurance and other costs – “are expected to be less than £5 per passenger”.

This compares with an estimate of £7.50 for agents and tour operators.

The DfT’s impact assessment also concedes that the EU Services Directive would prevent the government extending Atol protection to all airline holiday sales.

The Directive means airlines based in other EU member states cannot be required to hold an Atol – although the DfT believes carriers established both in the UK and elsewhere in Europe could be brought in.

The department notes: “There would continue to be a different regulatory framework for holidays sold by airlines [based in other EU countries].”

It acknowledges: “There is little concrete information about the number of Flight-Plus holidays sold by airlines.”

The impact assessment also confirms the government’s intention to bring agent-for-consumer sales into Atol.

It notes agent-for-consumer sales offer “a potentially significant way for businesses to circumvent the scheme”, but adds: “There is little information about the number of holidays organised on an agent for the consumer basis.”

However, the department does not expect extending Atol to agent-for-consumer sales would bring any additional agents into the scheme.

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